New York—Ralph Lauren Corp. today reported it beat profit estimates despite a 10% decline from last year as revenue growth failed to offset higher operating expenses.
The company, whose brands include Polo, American Living and Club Monaco, posted net income of $162 million or $1.80 a share, compared with $181 million or $1.94 a share in the prior-year quarter. Still Ralph Lauren beat analysts’ estimate for $1.76 a share.
Net revenues grew 3.4% or 2.4% in constant currency, to $1.71 billion from $1.65 billion in the same quarter last year. Yet that missed analysts’ average estimate for $1.73 million.
Consolidated comparable-store sales increased 3% or 1% on a constant currency basis.
Our better-than-expected first quarter profitability reflects excellent progress on our strategic initiatives, including double-digit revenue growth for our international and global e-commerce operations,” President/Chief Operating Officer Jacki Nemerov said in a statement.
Wholesale net sales declined 3.7% or 4.1% in constant currency, to $708 million, and retail net sales increased 9.2% or 7.8% in constant currency, to $960 million from the year-ago quarter.
Meanwhile, licensing revenues grew 3.8% or 3.7% in constant currency, to $40 million from last year’s $39 million.
Operating margin contracted 240 basis points to 14.3%, primarily due to higher operating expenses, partially offset by a 30 basis points improvement in gross profit margin to 61% from last year.
Looking ahead, Ralph Lauren Corp. expects consolidated net revenues for the second quarter to increase 4% to 6%. The company also said it continues to project revenue growth of 6% to 8% for the fiscal full year.
Analysts are expecting second quarter revenues to grow 7.9% to $2.07 billion and full-year revenues to grow 7.1% to $7.98 billion.
“Our first quarter results demonstrate that we are making the right strategic decisions and investments to support our long-term growth objectives. Later this month, we’ll mark an important milestone for the Polo brand with the introduction of Polo for women,” Chairman/CEO Ralph Lauren stated.
The company’s expansion includes the opening of a new Polo flagship in New York City and a plan to open a 20,000-square-foot store in Greater China.